Cliff Baty

Paul Pogba after his world record transfer to Manchester United. Credit: SkySports

Foreign exchange risk is an ever present concern for global businesses with large financial commitments outside their home borders. Whether paying suppliers or bringing back overseas earnings the risk of changes to the final price changes because of currency fluctuation is a risk of operating overseas.

Managing FX risk has not traditionally been a concern for soccer clubs who, despite their global audiences, conduct the majority of operations in their home currencies. This has begun to change as clubs reach further abroad for licensing opportunities with global partners and international player transfers. With the latter presenting the risk of obligations in a foreign currency.

English Premier League clubs have been able to control this risk thanks to strong bargaining power that stems from two factors: being members of the world’s most marketable league and doing business in a stable international reserve currency. Unfortunately, last year’s Brexit vote seems to have thrown at least some doubt about the latter with Cliff Baty, Manchester United CFO saying that the uncertainty added in complexity for player contracting.

“It was a bit difficult last year when we were trying to make signings and you had players questioning the value of being paid in sterling,” he said.

“A lot of European players will want to be paid in euros, understandably to a degree. But we are a sterling company . . . [and] managing that is quite tricky.”

The biggest clubs are hedged against currency movements, earning euros from playing in European competition and dollars from international sponsorship deals. Even so, Mr Baty said his club does not have enough euros in hand to accede to the request, insisting players be paid in pounds instead.

Players looking to be paid in euro rather than sterling is not an earth-shattering change but still a reminder that the industry is subject to the same concerns as normal business.